Why the workforce is shrinking

workforce

The Washington Post’s Wonkblog presented a good summary this week of the intersecting factors contributing to steep declines in workforce participation. They identified three different dynamics at work, but unfortunately they left out one really important statistic that helps tie them all together. Without that one additional factor, it is tough to appreciate what we are experiencing or to recognize the policy demands created by this transformation.

The  article points out that declining workforce participation is influenced by:

1) Demographics – the Baby Boom generation is retiring. In fact, almost all of the decline since 2011 is attributable to retirements.

2) Economic weakness – many of the long-term unemployed are simply giving up their careers, falling into poverty or leaning on family where possible.

3) Social Security disability – related to both of the two other factors, many more people than before are applying for and receiving permanent disability status.

What these factors overlook is the larger set of structural forces that are going to drive down workforce participation further, even after a full economic recovery. The best clue to this factor comes from examining long-term workforce participation in the most affluent segment of our population: white males.

Labor force participation by adult white men has been on a continuous steep decline since we started measuring it in the 1940’s. It’s not because white folks are so shiftless. It’s because we’ve been getting richer.

The length of a productive career, as a percentage of a lifetime, has been dropping steadily as capitalism advances and that process has accelerated dramatically since the rise of global capitalism a generation ago. Yes, there are fewer jobs available at the low end of the economic spectrum than there were fifty years ago, but that’s not the only dynamic at work. A productive, successful career starts later and ends earlier than it ever has. Our most lucrative careers don’t crank up until a worker is nearly thirty and they taper off to more or less voluntary work, or entrepreneurship, about twenty years later.

White males have been the first to experience this transformation because they have traditionally enjoyed the greatest access to the best careers, but this transformation is spreading through the rest of the culture. We are seeing a steeper shift right now because of an unusually weak economy and the beginning of the Baby Boom retirement cycle. However, declining workforce participation rates are likely to continue even as the economy recovers. Understanding this dynamic changes the range of relevant policy approaches pretty dramatically.

Chris Ladd is a Texan living in the Chicago area. He has been involved in grassroots Republican politics for most of his life. He was a Republican precinct committeeman in suburban Chicago until he resigned from the party and his position after the 2016 Republican Convention. He can be reached at gopliferchicago at gmail dot com.

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Posted in Economics
6 comments on “Why the workforce is shrinking
  1. […] shape of a successful career is changing. America today generates more profit than ever before with less demand for labor than ever before. For people who lack the family resources to support many years of fantastically expensive […]

  2. John Galt says:

    Infrastructure investment is sorely needed. It should have been a big part of the stimulus and, since construction was probably the hardest-hit sector, it would have been effective. For all the talk of “shovel-ready” projects, however, it doesn’t seem like much was done. Perhaps when the Republicans realize that investment in public goods is economy-boosting and the Democrats realize that paying people to do something useful is preferred over paying them to do nothing, we can start repairing/rebuilding bridges, roads, airpots and trains.

    The Ike Dike is a dumb idea. It would be vastly more expensive (by orders of magnitude) than the numbers put forth so far and by design would protect physical infrastructure largely owned by private companies along the ship channel at public expense while deflecting the storm surge toward inhabited areas of Galveston and Bolivar. The water is going to go somewhere – when I was living in NC a number of years ago, Hurricane Fran simply carved a channel through Emerald Isle. Thus, taxpayers will pay to protect BP’s refineries while putting themselves at more risk. The responsibility for protecting billion dollar refineries should lie with the companies that own them

  3. lomamonster says:

    Agreed that declining workforce participation rates are likely to continue even in the midst of economic recovery, but there is one dominant proviso which might reverse the entire process. That is – the imminent failure of our infrastructure and it’s necessary rescue.

    It will not only require the hiring of massive numbers of laborers, but also the hiring of legions of administrative personnel both in state and national governmental positions over an extended amount of time which might even be considered to be burgeoning career opportunities well into the future.

    Even more hiring will occur in banking and insurance, police and fire departments, the restaurant and hotels, clothing and uniform rental outfits, machinery rentals, and just about every other business related to infrastructure expansion that one could think of. Mining, metals, plastics, foundries, architectural firms, accountants – – well, you can see the picture. It’s going to be a madhouse of employment. Maybe there will be some serious money in hip and knee replacement stations? Just kidding…

    This will be the decade of disastrous infrastructure failures the likes of which we have never seen unless we get to work, and we had better do it while money is still affordable in world economies. Otherwise, it’s third world stagnation and further economic disparity.

    Now that, we cannot afford at any cost!

    • flypusher says:

      There’s infrastructure, and then there’s considerations like the Ike Dike. So much of the energy sector is in the hurricane danger zone.

      • lomamonster says:

        Fascinating! I had no knowledge of the Ike Dike until you mentioned it! Yep, that would bring incredible investment in as well as large employment opportunities.
        Thanks, flypusher!

      • flypusher says:

        Slight thread jack here, Eric Berger aka SciGuy, has some excellent blog posts on the subject, like this:

        http://blog.chron.com/sciguy/2010/01/ike-dike-proponent-responds-to-commish-steve-radacks-rant/

        I think it is something worth doing, given how the population is projected to increase and that oil and gas aren’t going obsolete anytime soon, the guarding the energy producting infrastructure has national security implications. I do share the concern about developers running amuck should this be built, so in addition to deciding who funds such a project, there need to be some very solid environmental regs in place first.

        Back towards your point loma, when it comes to job creation, I think that it’s necessary and proper for both the public and the private sectors to be involved. This is going to cost lots of $, but it is $ very well spent, because we all need the infrastructure, and the people who build it can use the jobs.

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